However President Park Geun-hye has said the money is "presumed to have been funnelled" to the government branch which runs the weapon programme.

South Korea suspended its operations at Kaesong last week.

It followed the North's launch of a satellite at the weekend a month after it conducted its fourth nuclear test. Both acts violate UN sanctions.

The North called the shutdown of Kaesong, one of the last points of inter-Korean co-operation, "a declaration of war".

Ms Park also warned the North would face total collapse if it did not abandon its nuclear programme.

Analysis: Stephen Evans, BBC News, Seoul

Image copyrightGetty Images

The South Korean government has looked clumsy in its handling of these allegations. The unification minister who made the initial statement has now said "I think my comments about related documents were misrepresented".

But President Park said on Tuesday that most of the money is "presumed to have been funnelled to the Workers' Party responsible for nuclear and missile development".

The row matters because it's prompted questions in South Korea: if the government in Seoul was so certain that South Korean companies were unwittingly helping to fund the development of weapons aimed at South Korea why was nothing done earlier?

And was it a breach of sanctions? There has been no clear answer to either question.

Kaesong employs thousands of workers from the North in Southern-run enterprises. The South's unification ministry estimates about 616bn Korean won (£350m; $508m) has been paid to the North over the years.

The North Koreans' wages are paid to the government, which then distributes them in the form of vouchers and local currency. But the South had not put a figure before on how much was being retained by the government.

On Sunday, Mr Hong said "multiple reports" indicated it was 70%, and that "the money is used to develop nuclear weapons or missiles, or to purchase luxury goods".

This led to accusations that if the South had known where the money was going, it may itself have broken UN resolutions against funding North Korea weapons or nuclear research.

Speaking to parliament later on Monday, Mr Hong said if it were proved the North had misappropriated the wages it would "constitute a breach of relevant UN resolutions". But so far "there are only concerns... and I've not said that there is clear evidence".

He apologised for an "inadequate explanation" which he said was based on speculation.

On Tuesday, Ms Park simply said most of the money sent to Kaesong was "presumed to have been funnelled to the Workers' Party responsible for nuclear and missile development, instead of being used to improve the lives of ordinary people".

She also stressed the need to take "stronger and more effective measures" against North Korea, to make it "bitterly realise that it cannot survive with nuclear development and that it will only speed up regime collapse".

The UN is currently debating imposing more sanctions on North Korea over its nuclear and satellite launch.

But Ms Park hinted at unilateral action, saying the South must "throw away the impotent feeling" of relying on international sanctions and instead "mobilise all possible methods to solve the problem ourselves".

What is Kaesong?

Joint industrial complex located inside North Korea just across from the demilitarised zone

Launched in 2004 - it is a source of badly-needed cash for the North

124 companies operate there from industries including clothing, textiles, car parts and semiconductors

South Korean firms pay about $100m (£69m) a year in wages. About 54,000 North Koreans work there

Last shut down in April 2013 - for four months - after US-South Korean military drills angered North Korea